OnDeck rings in biggest NYC tech IPO since 1999

OnDeck announced Thursday that it raised $77 million in an investment round led by Tiger Global Management.

A combination of investor interest in alternative lending platforms and great timing helped shares of OnDeck surge in its first day of trading after the Manhattan-based lender went public Tuesday at $20 a share. On Wednesday, its stock was trading as high as $28, or 40% above its offering price. It closed up 38%, at $27.67.

The company's $1.32 billion market cap at its debut was the biggest for a venture capital-backed New York City tech company since 1999, according to financial services firm Dealogic. OnDeck is a Crain'sFast 50 company and one of the Best Places to Work in the city.

Two weeks ago, OnDeck was expecting to go public at $16 to $18 a share, but had the good fortune to follow San Francisco-based Lending Club. The peer-to-peer online lender launched its IPO last week with a $5.4 billion valuation that has since shot up to $9.8 billion.

The timing was "a happy accident," said OnDeck CEO Noah Breslow in a phone interview from the New York Stock Exchange, where he had rung the opening bell. "It worked out better for the industry overall and got a lot of investors excited about the alternative lending category."

The company, which relies on analytics and algorithms for evaluating borrowers, plans to double its engineering team next year. It also expects to move into markets outside of the U.S. and Canada, launch products beyond term loans to small businesses and a line of credit product for day-to-day expenses. But Mr. Breslow said the IPO was not about raising money.

OnDeck has raised more than $400 million in financing since its 2007 launch, including $250 million in debt financing. In the nine month period ending in September, OnDeck had gross revenue of $108 million, or more than double the amount from the year-ago period. Though it lost $14 million for the period, it eked out a profit of $350,000 in the most recent quarter.

"There was a branding element to this," he said of the IPO. "We want to be a mainstream part of the financial system. Most small business owners haven't heard of OnDeck. We think being publicly traded, with all the transparency around that, is something our customers will want to see and will respect."

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